Exactly, although I'm not sure the market will ever realize this.....
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Weren't the people in charge of Model X production over this period let go? The model 3 is easier to build than the model S, and the model S didn't have any major long term delays during the ramp like the X. The S had minor delays in the ramp.
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Not really. With lower than expected productions on the 3. They just reached -1200% GM on the 260 produced instead of -200% GM on 1500 or something like that. Worse, they might have spent more to fix issues they did not anticipate, making margins even worse.
What is the effective tax rate? It is my understanding a few years ago that half of US corporations pay no tax at all. Especially egregious is Standard Oil's effort during the Eisenhower Administration. 1) change the tax law here to permit deduction of foreign income taxes; then, 2) tell the Saudis to call any increase in oil price an income tax. (I think this is what Musk's finds most pernicious about subsidies to the fossil industry.)
I have the book, somewhere, but can't find it now. Christopher Rand, a retired oil executive, blew the whistle on this and other matters in his 1975 book published by Little Brown: Making Democracy Safe for Oil: Oilmen and the Islamic East. He exposed Socal's tax bill and profits one year. (General Nos are correct order of magnitude, but don't hold me to details since it has been 42 years since I read the book.) Worldwide profits for the year (??don't remember) ∼$650,000,000. After deductions tax bill: ∼$86000 refund. But something like AMT brought that up to ∼$200,000 or so. Effective tax rate (using my dodgy numbers): .03% (I have confidence I am not wrong by as much as one percentage point on the calculation.)
I became interested in U.S. energy policy in the 70s during the oil embargo. Then a number of economists found to their amazement that their studies showed no collusion by the companies to fix prices. The problem was the government. Why didn't they study the government's connection to the industry? Admittedly, when students wanted to re-enact a protest rally then I publicly burned my Shell credit card, so you should know I'm a spurious character on this issue.
Where are you coming from?
larmor
Active Member
The market has trouble with math, and graphs, but is great at emotions.
Sudre
Active Member
To me they are saying the bottleneck issues are not fixed yet.
I agree with your last statement. They are thinking about how to fix some of the issues. They do not have a fix yet that they are putting in place. Others might have a different take on that tho.
MX production people weren't the problem, Chief designer was.
FredTMC
Model S VIN #4925
You only look at margins at scale. We ain't at scale yet.
Scale comes in 2018
All analysts know this. Even the haters
One person's take: In the long term this will not be a problem for TSLA share holders. The S/X delivery numbers were good and I suspect we will not see a repeat of the X early production debacle.
The drop AH does not surprise me though. It is all because of the '3'. Even though EM couched his wording about the possibility of the ramp being delayed by a week or so having a meaningful impact on the 'S' curve, Wall Street's last memory of a new auto product ramp by Tesla was the X.
As soon as there was *any* mention of even a minor issue causing production/ramp delays the bots were sure to be set off in a negative direction as were some human traders.
Once there is clear evidence that truckloads of the model 3s are being delivered the SP will recover. Until then it will be difficult to predict the direction of the SP day to day.
The drop AH does not surprise me though. It is all because of the '3'. Even though EM couched his wording about the possibility of the ramp being delayed by a week or so having a meaningful impact on the 'S' curve, Wall Street's last memory of a new auto product ramp by Tesla was the X.
As soon as there was *any* mention of even a minor issue causing production/ramp delays the bots were sure to be set off in a negative direction as were some human traders.
Once there is clear evidence that truckloads of the model 3s are being delivered the SP will recover. Until then it will be difficult to predict the direction of the SP day to day.
ValueAnalyst
Closed
Keep in mind that Model 3 today is one of Model S and Model X and Tesla Energy. Fixed costs are spread out a lot more.
Margin impact from solid Model X and Tesls Energy growth will more than offset any Model 3 shortfall.
FredTMC
Model S VIN #4925
I bet the MS/MX Gross Margins are sequentially higher.
That's material and important
We will see on Q3 ER call
Yet, still the Model 3 has no FM radio. So perhaps it's a mindset or a goal-setting problem rather than the actual implementation.
For what’s it’s worth - I’m a Day one reservation holder and my delivery estimate of oct -
Jan has not changed.
Jan has not changed.
We're not privy to the details here, but if his top production people went along with it and told Musk they could meet those deadlines then they were also part of the problem.
erthquake
Active Member
Likely, but not assured. It seems a lot of us here, I included, got caught up and in the hope of decent Model deliveries. We tried to read what little evidence existed, but I'm afraid we tended to view that evidence with more rose colored glasses.
I still think it's likely issues will get resolved quickly, but I'm no longer taking it for granted, especially with the vague "near-term" qualifier for addressing the bottleneck issues.
It doesn't matter too much to me anyway since I'm very long. But I do need to sell a few shares to cover the down payment and get my Model 3 wrapped. Since I'm in the Oct-Dec delivery window, there are some timing issues wrt getting the best price on my shares. Hopefully my reservation is just late enough that by the time delivery approaches the bottlenecks are resolved and cars are flying off the line.
I'm not arguing against this either...
The whole point of management warned of lower GM guidance for Q3 was early 3 production cost. This cost is unlikely to be significantly lower just because they produced 260, not 1500+ as they guided because most was fixed cost planned months ago. This cost is more than likely to overshadow one or two thousands additional S/X otherwise it wouldn't warrant a lower guidance on overall GM to begin with.
What were they supposed to do? Refuse to work until he gave them a reasonable timeline? They would have been gone at that point rather than after. I get the sense that Elon gives the deadlines, not the other way around.
Problem: It would seem that most people who don't go along with EM's *suggestions* don't last very long at Tesla.
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